A Market Indicator From Early 1900s Is Blaring an Alarm for Stocks
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A century-old indicator that has helped predict the direction of the US stock market is signaling more pain ahead for battered investors.
Known as the Dow Theory, it holds that moves in the Dow Jones Industrial Average must be confirmed by transport stocks, and vice versa, to be sustained. As of Thursday’s close, the 20-member Dow Jones Transportation Average — a barometer of consumer and industrial demand — has slumped 19% from its November peak, teetering near so-called bear-market territory.